| Economists have been marveling to me and my colleagues about how the U.S. economy has weathered President Donald Trump’s previous tariffs surprisingly well: Prices haven’t soared, businesses are still hiring, and the stock market is intact. That may change this week. After months of announcing and then delaying massive tariffs on nearly every country, Trump let them go into effect Thursday. “Goods from nations with which the U.S. does hundreds of billions of dollars of trade, such as India, Switzerland and South Africa, will see new taxes of up to 39 percent, with India’s rate set to jump to 50 percent in three weeks,” The Washington Post’s Jacob Bogage and David J. Lynch report. It means coffee, back-to-school items, baby gear and more is probably going to get more expensive soon. “This is a situation we feared, and now we’re living it,” said Diane Swonk, chief economist for the global auditing firm KPMG. Here’s more about what’s going on, why Trump is doing this and what to expect. Tariffs were already starting to affect Americans’ wallets Prices on many daily goods and big purchases are probably going up. Before Thursday, Trump had already imposed the highest tariffs in about a century. One reason they haven’t affected consumers too much is that investors and businesses have figured out a way to live with 10 percent levies on most goods, raising prices slightly and hoping higher tariffs wouldn’t take effect. But prices were rising under 10 percent tariffs on basics such as dish soap, toilet paper, toothpaste and detergent. And now, Trump has instituted tariffs that range from 20 percent to 50 percent on countries that export goods that Americans and U.S. businesses have come to rely on, which could make products such as coffee from Brazil, olive oil from Italy and Apple’s iPhone, made with parts from China and India, more expensive. Same with furniture and cars. “In some ways, tariffs are really simple: The goods come into the country, and you only get the good if you pay the tariff,” Claudia Sahm, chief economist at New Century Advisors, said in a recent interview. “We haven’t run this experiment in living memory.” A recession isn’t out of the realm of possibility There’s a reason tariffs aren’t a modern economic tool. They tend to raise prices and slow growth. That could lead to a nasty economic phenomenon known as stagflation: job losses combined with inflation that is very hard to fix. Inflation isn’t sky-high, but it is higher than monetary policymakers want it to be. And there’s evidence people are starting to lose jobs. The revised jobs numbers the government shared Friday showed a summer slowdown in hiring, leading to Trump firing the official in charge of releasing the data. Those job numbers suggest “a growing number of industries have transitioned from weak hiring to layoffs,” Heather Long, contributing columnist and chief economist at Navy Federal Credit Union, writes in The Post. “Our view is the U.S. economy will narrowly avert a recession,” Swonk said, “but we will see an increase in unemployment.” Trump likes high tariffs Economists I’ve talked to say Trump genuinely sees value in higher tariffs. It’s a negotiating tactic on which he often relies, and the government collects billions of dollars at the border that could help offset the trillions of dollars the government is losing because of extending his tax cuts. “IT’S MIDNIGHT!!! BILLIONS OF DOLLARS IN TARIFFS ARE NOW FLOWING INTO THE UNITED STATES OF AMERICA!” he posted on social media Thursday. “The truth is, Trump wants high tariffs. He has them, and he intends to send them higher,” Andy Laperriere, head of U.S. policy research at investment bank Piper Sandler, wrote in a recent note to clients. Congress could vote to rein in tariffs, but so far Republican leaders are standing back. The legality of Trump’s tariffs are being fought over in court — and were briefly paused and could be again soon. But that fight is likely to end up in the Supreme Court, which has been largely deferential to Trump’s presidential authority. Still, the fact remains that at the beginning of Trump’s term, the economy was humming, inflation was finally under control after the pandemic, and polling showed Americans were optimistic for the first time in years about their economic situation. Now, all of that may be turned on its head. Just 18.5 percent of Americans say they are better off financially than they were a year ago, according to a YouGov tracker. “It’s insane,” Michael Strain, an economist with the conservative-leaning American Enterprise Institute, said in a recent interview. “This is an enormous self-inflicted wound on the economy, and to see our government do this to American businesses and households is something I never thought I would see.” | 
